Labour government of Callaghan [1976-79] Flashcards
% of workforce unemployed in 1977?
5.7
% of workforce unemployed in 1978?
5.7
% of workforce unemployed in 1979?
5.1
Working days lost In strikes in millions in 1977?
10.14
Working days lost In strikes in millions in 1978?
9.28
Working days lost In strikes in millions in 1979?
31.19
GDP change in % in 1977?
+0.9
GDP change in % in 1978
+3.4
GDP change in % in 1979?
+2.2
Balance of payment [£m] in 1977?
+154
Balance of payment [£m] in 1978?
+254
Balance of payment [£m] in 1979?
-902
What were the Labour government given in December 1976?
A loan from the IMF
How much was the IMF loan?
£3 billion
Why had Labour applied for the loan?
They were anxious that there would be a run on the pound
In exchange for the IMF loan what did Labour have to do?
Had to make spending cuts which disgruntled the left of the party.
Run on the pound = ?
Increased nervousness over the value of the pound so investors sell quickly to limit losses causing the price of the pound to decline rapidly.
What happened as a result of the IMF loan?
The economic situation wasn’t that dire as the Labour government had feared. Callaghan had coped with the situation quite well and the economy was recovering with a positive balance of trade and upturn in GDP growth.
However it reinforced the image of Britain as being in economic decline. Tories denounced it as a national humiliation.
What was the affect of the IMF on the Labour Party?
The left of the party saw it as a betrayal, caving into the international financiers. Although Callaghan kept unity amongst Labour MPs there was rise in leftist militancy in some public sector trade unions and local councils.
How did the economic situation improve by 1978?
Economic situation improved as North Sea oil came on stream. By 1978, there were nine oilfields in production, inflation rates fell to 10%. Unemployment at 1.6 million was still considered high but it was beginning to fall. Number of industrial days lost was at a 10 year low.
What had happened by 1977 to Labour and how had Callaghan sorted the issue?
Labour’s majority in the House of Commons had disappeared so Callaghan strengthened the government by making the ‘lib-lab’ pact.
What could Callaghan do with the ‘lib-lab’ pact?
Defeat the vote of no confidence
What had Callaghan promised in return for the ‘lib-lab’ pact?
Promised to move ahead with devolution for Wales and Scotland.
What did the 1978 devolution act pave the way for?
With the act being passed it opens the way for referendums.
Why did the way the referendums were set up mean that devolution would likely not pass?
A labour MP who opposed devolution inserted a clause which meant that a simple majority wasn’t enough for the vote to pass.
Result of the devolution referendum in Wales and Scotland?
Wales - NO - 20.3% yes, 79.7% no
Scotland - NO - 51.6% yes, 48.4% no
What did the result in the referendum mean for Labour?
The disappointed Scottish Nationalist MPs withdrew their support from the Labour Party. This was to prove decisive in the events of the winter of 1978-79.
